The government is providing £290m support for renewable energy projects and phase out unabated coal power generation by 2025.
The second Contracts for Difference auction reflects the government’s pledge to provide £730m of annual support on renewable electricity projects over this Parliament.
The second auction, which will take place in April 2017, will produce enough renewable electricity to power around one million homes and reduce carbon emissions by around 2.5 million tonnes per year from 2021/22 onwards.
It is intended for technologies like offshore wind, anaerobic digestion, combined heat and power, and wave, tidal stream and geothermal projects.
The government expects the auction to deliver cheap green energy for investors. The maximum price for offshore wind projects is now 25% lower than was set for the last auction, and a competitive auction could further reduce that cost.
UK Business, Energy and Industrial Strategy Secretary of State Greg Clark said: “We’re sending a clear signal that Britain is one of the best places in the world to invest in clean, flexible energy as we continue to upgrade our energy infrastructure.
“This is a key part of our upcoming Industrial Strategy, which will provide companies with the further support they need to innovate as we build a diverse energy system fit for the 21st century that is reliable while keeping bills down for our families and businesses.”
On the other hand, the government said that it is unclear whether or not to treat non-mainland Great Britain offshore wind farms differently than mainland onshore wind farms.
While the Contracts of Difference covered offshore wind, wave and tidal, but delayed access to competition for remote islands and instead asking for a consultation has garnered criticism from Scotland.
Scottish Renewables CEO Niall Stuart said: “We’ve waited a long time for this announcement, which signals further significant investment in the UK’s offshore wind sector.
“However, developers and communities on the Scottish remote islands will be bitterly disappointed that Government has put off a decision on allowing projects on Scotland’s islands to compete for long-term contracts for renewable energy.
“With more than 800MW of renewable capacity consented and ready to deliver and a significant capital spend going to UK-based suppliers, the island projects not only serve as important contributions to the Scottish and UK renewable energy targets but to our economy as well.”
